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How to Calculate Daily Interest (The Easy Way!)

📈 Learn how your money grows — or what borrowing really costs you — one day at a time!

Whether you’re earning interest on savings or paying it on a loan, understanding daily interest can help you make smarter financial decisions. The good news? It’s simpler than you think!

Let’s break it down step by step.

🙋 What Is Daily Interest?

Daily interest is the amount of interest added (or charged) to a balance each day. It’s often used for:

  • Credit cards
  • Personal loans
  • Mortgages
  • Savings accounts
  • Investment interest

Instead of charging or paying interest once a month or year, daily interest means the balance changes every single day — so the sooner you pay (or invest), the more it matters!

🧮 The Daily Interest Formula

Here’s the basic formula for calculating simple daily interest:

Daily Interest = (Principal × Annual Interest Rate) ÷ 365

Where:

  • Principal = the amount you borrowed or invested
  • Annual Interest Rate = written as a decimal (e.g. 5% = 0.05)
  • 365 = number of days in a year (use 366 for leap years)

📋 Example 1: Daily Interest on a Loan

Let’s say you owe $2,000 on a loan with an annual interest rate of 6%.

Step 1: Convert the interest rate to decimal → 6% = 0.06
Step 2: Use the formula:

Daily Interest = (2000 × 0.06) ÷ 365
Daily Interest = 120 ÷ 365 ≈ $0.33

So you’re being charged about 33 cents per day in interest.

If you wait 10 days to make a payment, that’s $3.30 in interest alone!

📈 Example 2: Daily Interest on Savings

Let’s say you deposit $5,000 into a high-yield savings account earning 4% interest per year.

Step 1: Convert the rate → 4% = 0.04
Step 2: Use the formula:

Daily Interest = (5000 × 0.04) ÷ 365
Daily Interest = 200 ÷ 365 ≈ $0.55

So your account earns about 55 cents per day — and that adds up over time!

⚙️ Daily Interest Calculator

Use the tool below to calculate the daily interest amount. Enter the principal, annual interest rate (%).

🤓 What About Compounding?

The examples above use simple interest — a fixed amount each day.

Many banks and loans use compound interest, which means interest gets added to your balance and then earns more interest. That’s a little more complex, but the daily rate is usually calculated like this:

Daily Rate = Annual Rate ÷ 365

Each day, the balance increases slightly, and future interest is based on that new balance.

✅ Why It’s Useful

Understanding daily interest helps you:

  • Pay off credit cards or loans faster
  • Maximize savings by earning more over time
  • Avoid unexpected charges
  • Make smarter financial choices every day

📌 Quick Tips

  • Pay early if you’re being charged daily interest
  • Leave your savings alone to let interest grow
  • Check your bank’s interest rules — some use 360 days instead of 365